Lost in all the free agent excitement this offseason in the NBA is the looming possibility of a lockout. The league and the players union have not yet reached a bargaining agreement that would keep players on the court.
NBA commissioner David Stern is trying to avoid a lockout in an already bad economy, but NBA union director Billy Hunter isn’t helping his cause. Stern told the union that the NBA lost as much as $370 million dollars last year, but Hunter doesn’t believe those numbers are valid. Hunter thinks a lockout is inevitable.
“I’m preparing for a lockout right now and I haven’t seen anything to change that notion. Hopefully I’ll see something over the next several months,” Hunter said. “As of this moment, it’s full speed ahead for me in preparing the players for a worst-case scenario.”
These comments came after an owners meeting held last Monday in Las Vegas, Nevada. Hunter says that the numbers presented by Stern are exaggerated at best, and are based on an attendance decline that didn’t happen.
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“There might not be any losses at all. It depends on what accounting procedure is used,” Hunter said. “If you decide you don’t count interest and depreciation, you already lop off 250 of the 370 million dollars, and everything else was predicated upon what they were projecting, which was a decline in attendance that didn’t happen. Attendance was the second-highest ever.”
Fundamental differences are in jeopardy of not being worked out, and the current deal expires next June. Hunter and the union believe that the current deal is fine the way it is. Stern maintains that franchises will not be able to operate profitably unless a new deal can be agreed upon.
NBA deputy commissioner Adam Silver says that lost money is not the only problem facing teams. Expenses to run an organization are getting higher with new technology in arenas, and marketing costs are rising to keep up attendance figures.
“Part of the problem with the existing system is it’s based largely on revenue, not net revenue,” Silver said Monday. “Although our actual revenue numbers were better than what we projected, it came at a large cost. Our teams did a spectacular job in a down economy of increasing ticket sales, but that came at the cost of additional promotions, additional marketing, additional staff.”
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Hunter points to the decline in player salaries after five years of increase as his main point. The league has also experienced all-time high revenues in that period.
“The projected losses of $400 million were based on revenue projections made last summer, and in fact revenues did not go down, they actually increased. So for them to say there has been no shift in the environment, it just doesn’t hold water,” Hunter said.
The salary cap figure for 2011 was released last week, and at $58 million is higher than even this season’s. Hunter says that number is proof that the NBA is indeed operating with less loss than reported by the commissioner.
NBA sportsbooks have set the Miami Heat, the team to sign the most free agents this offseason, as the favorite to win the 2011 NBA Finals at 7/4 odds.